THE euphoria in the private home market is tipped to start tapering off in the wake of the weaker stock market, although no one expects sales to plunge to the dismal levels seen late last year.
Recent sales data suggests the market has touched bottom and is climbing its way back up, spurred by developers cutting prices and offering incentives as well as a feeling among buyers that they had better move fast before the bargains go.
New private home sales have crossed the 1,000 unit mark every month since February with 1,668 transactions last month, the highest since August 2007, according to data from the Urban Redevelopment Authority yesterday.
Deals done in April and last month show that home prices have generally risen from their first-quarter lows, said CBRE Research.
Knight Frank chairman Tan Tiong Cheng points to a lift in confidence: 'There's a bit of euphoria out there, brought about by the recovery of stock markets around the world since March, and many who have made money in the stock market would have ploughed it back into the property market.'
Developers have begun testing the market by pushing prices up by, say, 2 per cent to 3 per cent a week, consultants said.
And some buyers have been rushing to showflats and putting down deposits - much like the boom days, even though Singapore remains in a recession.
However, the increased activity remains confined to the residential market, said Mr Desmond Sim, Jones Lang LaSalle's associate director of research.
'This, in our regard, is largely fuelled by softer prices and strong latent demand, which alone will not be sufficient to sustain an overall recovery in the market,' he said.
Unless the overall economy improves, it may still take 'quite some time' before the super-luxury launches come back.
'Singaporean buyers tend to be very kiasu and overzealous. One buys, the rest all go out to buy,' said a market watcher who declined to be named.
Thanks to these buyers, sellers have raised their asking prices - sometimes rather dramatically. The result will possibly be slower sales for this month.
'Individual sellers are shifting their goal posts and taking their properties out of the secondary market,' said Mr David Neubronner, executive director, residential at Credo Real Estate. For instance, high-end condo Ardmore II was selling for below $2,000 psf earlier this year but sellers now want as much as $2,500.
But that sort of rise is far too optimistic in today's market, say experts.
Home prices have dropped by about 30 per cent from January last year. Although prices in the past three months have generally gone up by 10 per cent, they are overall still about 20 per cent off the peak, said Mr Neubronner.
The two key underlying concerns - falling rents and a supply glut - will moderate any rise in home prices, he said.
'The more conservative people will see a 'W' shaped recovery but I see prices plateauing for over a year or 18 months,' he said, adding that demand from foreigners in the region and upgraders will keep the market steady.
A market watcher said home prices may continue to run a bit more before they lose steam so now is an opportune period for developers to launch projects, he said.
As Citigroup put it in its recent report, this is a window in a weak market, rather than the start of a cyclical upturn.
Developers with land bought at levels before the peak of 2007 will want to rush the launch of their projects, experts said.
But that excludes luxury-end developers, who are staring at a likely worst-case scenario of further price drops.
Top-end home prices are expected to fall nearly as much as they have risen - rises that at times were not backed by fundamentals, experts said.
There is still the risk of deferred payment defaults in the high-end segment, which could add to developers' supply.
'People believe that the worst is over but no one knows for sure,' said a market observer. The great fear among developers and speculators now is a repeat of what happened around the start of the decade.
'The property market then recovered from the 1997 crisis. En bloc sales also came back. There was a rush but it lasted less than a year before the dot.com bust came,' said the observer.
'And then it was quiet for a few years before the slow recovery came.'